updated 1/9/2009 1:59:25 PM ET 2009-01-09T18:59:25

Guests: Kent Jones, John Harwood, Richard Engel, Danny Davis, Geoff Elliott, Barack Obama

RACHEL MADDOW, HOST:  On this story, on this night, on this day.  Thank you, Keith.

And thank you for staying with us at home for the next hour.

You know, another day, another amazing Roland Burris press conference, and another amazing cave-in by the Senate.  We will be joined tonight by the Illinois politician who turned down Rod Blagojevich‘s offer to be senator before Roland Burris accepted.  Plus, we have new information dug up from Australia about the John Howard/Blair House/Obamas-have-to-stay-in-a-hotel embarrassment.

But first, for the next two weeks leading up to the inauguration of Barack Obama as the next president of the United States, civics geeks and average Americans alike will be getting their television recording device TiVo machines ready, and buying souvenirs and taking photos, and buying up all of the newspapers in the newspaper boxes, to try to capture some of the quite striking symbolic moments that are now happening, moments that capture the gravity, the historic importance of America elevating for the first time ever an African-American to the presidency.

Historic image exhibit A from today‘s new—this picture of the living people who have ever been elected president together in the Oval Office.  Today‘s lunch meeting which came at the suggestion of the president-elect was among the first and the most powerful images to remind the country and the world that, yes, it really did happen in America.

And while Obama‘s election is a bit awe-striking at times when viewed from a big picture, historic perspective, the smaller perspective on what‘s he‘s going to face as president, what‘s on his plate, is perhaps equally awe striking.  Presidents Carter, Bush, Clinton, and Bush surely offered kind counsel to Obama today.

But the specific advice he could most use was simply not available in that room, because none of those presidents inherited the kind of omnibus super crisis that faces Barack Obama and this country.  When Jimmy Carter was sworn in, 2 ½ years had passed since Nixon had resigned and America was all the way out of Vietnam.  George H.W. Bush took over from the very popular Ronald Reagan, the Cold War was sort of over, and, though, the economy would swoon soon enough, it was not anything close to a crisis.

Clinton took the oath during an economic downturn but that was romper room compared to today‘s down-crash.  And George W. Bush entered office in peacetime with a $127 billion budget surplus.  Remember that?  It‘s OK if you blocked it out.

And so, Obama enters the presidency as an unprecedented politician, demographically speaking, and he inherits an unprecedented cacophony of deep and urgent crises.  Only five living people have ever been elected to the office, only one of them will ever have any idea what is going to be like for Barack Obama.

On this historic day, our own John Harwood sat down with Mr. Obama who, as is frequently the case, seemed way more calm and collected than we all feel.

(BEGIN VIDEO CLIP, CNBC)

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  Tomorrow, you are going to give a speech and talk about your economic stimulus package.  It looks like it‘s going to be at the high end of your range, around $775 billion.

BARACK OBAMA, PRESIDENT-ELECT:  That‘s correct.

HARWOOD:  If it‘s correct that, as your aides have said, the danger is doing too little rather than too much .

OBAMA:  Right.

HARWOOD:  Why stop at $775 billion?  Why not go to $1.2 trillion that some economists have recommended?  Is that because you think that the political figure of $1 trillion is too politically charged to get over?  Is it because you think more spending would be pork rather than stimulus?  Or do you think you‘ve figured out exactly the right amount of stimulus that‘s needed?

OBAMA:  Well, first of all, I think it‘s important to note that every economist, conservative or liberal at this point, agrees that we have to have a substantial recovery plan that helps to jump-start the economy.  That short-term is going to be expensive, but it would be much more expensive to see the economy continue in the tail spin that it‘s been going in.

We‘ve seen ranges from $800 billion to $1.3 trillion.  And our attitude was that given the legislative process, if we start towards the low-end of that, we‘ll see how it develops.  We are concerned .

HARWOOD:  So, it‘s going to get bigger?

OBAMA:  Well, we don‘t know yet.  We are not just going to wait until two years, and then we‘ll start worrying about what to do about the deficit.  We want to see, are there things that we can do now, under my watch, to start bending the curve towards a lower deficit.

I don‘t think that the Democratic Party has a monopoly on good ideas.  I think that the Republicans have a lot to offer.  And what I will do is to listen and learn from my Republican colleagues.  And any time they can make a case that this is something that would be good for the American people, just because Democrats didn‘t think of it and Republicans are promoting it, that‘s not a good reason not to do it.

There are going to be some times where we‘ve got some fights.  But my general point is, I‘m not looking for a fight and I am looking for as much cooperation as possible.

HARWOOD:  A lot of parallels have been offered between yourself and John F. Kennedy, who also made history, came in with a young, attractive family, had a lot of big Harvard brains around him as he began his administration.

OBAMA:  Right.

HARWOOD:  But we all learned during the 1960s that the best and the brightest don‘t always have it figured out right.

OBAMA:  You‘ve got to watch out for those Harvard guys.  They‘ll get you every time.

HARWOOD:  How confident are you that your plan is going to work and how do you avoid the dangers of being too cocky?

OBAMA:  Well, I think that the approach that we‘ve taken is not just to talk to the usual suspects, but talk to people that traditionally don‘t agree with me.

When we were on vacation in Hawaii, I was greatly discouraged from going body surfing, going to get shave ice was a major ordeal.  And, you know .

HARWOOD:  Well, were you told not to walk outside without your shirt on?

OBAMA:  Well, the—I learned of that after the first day.  But, I think that .

HARWOOD:  Was that—was that an embarrassment to you or do you care?  You got a lot of commentary about it.

OBAMA:  You know, it was—it was silly, but, you know, silliness goes with this job.

HARWOOD:  You got some flattery for that.

You were saying that it looks like you‘re going to win the tussle to keep your BlackBerry.

OBAMA:  I don‘t know that I‘ll win, but I‘m still fighting it.  And

but here‘s the point I was making, I guess, is that it‘s not just the flow of information.  I mean, I can get somebody to print out clips for me and I can read newspapers and—what it has to do with is having mechanisms where you are interacting with people who are outside of the White House in a meaningful way.

       

And I‘ve got to look for every opportunity to do that.  Ways that aren‘t scripted.  Ways that aren‘t controlled.  Ways where, you know, people aren‘t just complimenting you or standing up when you enter into a room.  Ways of staying grounded.

And if I can manage that over the next four years, I think that will help me serve the American people better because I‘m going to be hearing their voices.  They are not going to be muffled as a consequence of me being in the White House.

(END VIDEO CLIP)

MADDOW:  Joining me now is CNBC chief Washington correspondent, John Harwood, also, of the “New York Times.”

John, congratulations on this interview with the president-elect. 

Thanks for joining us.

HARWOOD:  Thanks, Rachel.

MADDOW:  You interviewed then-Senator Obama on the campaign trail a number of times as well as this interview today.  What differences do you see in him now between him as a candidate and him as president-elect?

HARWOOD:  Well, I‘m a little more struck right now, Rachel, by the similarities which is—you are talking about a very confident guy.  You know, I was asking him about the dangers of being too cocky.  And he said he was humbled by the challenges facing him.

But this is someone with a lot of self-assurance taking into that job.  He seems very comfortable in his abilities, his approach to the job.  He is expressing a little bit more desire for outreach to the other side, that sometimes you heard in the campaign certainly than you heard during the primary portion of the campaign.  And I think he is trying very clearly to build on this opening that he‘s got with Republicans.

You know, some strikingly optimistic or positive sounding words from Mitchell McConnell in the Senate, even John Boehner in the House of Representatives suggesting that they may be able to do a little business, at least, in this stimulus package when Republicans don‘t seem to want to go against a president-elect who is at 80 percent in the polls.

MADDOW:  On the issue of economic policy, so much of political strategy and dealing with the economic crisis is projecting confidence.  Markets want to know that the government has a good plan, a deliberate plan; they know what they‘re doing.  Does he seem in command of this just as policy subject matter?

HARWOOD:  I think he does.  And by the way, he indicated that he was attuned to market psychology.  He wasn‘t going to try to block that out or ignore it.  You know, there was talk during the campaign about whether the economic policy was about Wall Street or Main Street.  He‘s clearly paying attention to both of them.

But I think Barack Obama, in terms of having Larry Summers around him at the National Economic Council, Tim Geithner at treasury, feels that he‘s got an approach right now, he talked about beginning the economic stimulus package with about $800 billion or $775 billion that he is going to outline tomorrow, but expects that to grow somewhat.  And I think his team is confident they have picked out the ways to get the most bang for the buck in stimulus terms in the process.

MADDOW:  John, one of the things that got a lot of attention, politically, when the economic crisis was first being realized, when it was first being diagnosed, was the problem of a lack of regulation, a lack of appropriate regulation in the financial markets.  That has not been a hot political topic in terms of re-regulating those markets.  But Obama did talk about that today.  What did he say about regulating those markets?

HARWOOD:  Well, it was very interesting, Rachel, because his transition office is in the former headquarters of the Securities and Exchange Commission.  He said that over the next few weeks or month or two, he is going to propose a substantial rewrite of the financial regulation, doing something about this crazy quilt of agencies that do different things that have splintered up responsibility.  He talked about a global component to that so that he wants to have his framework out before he goes to London for the G-20 on April 2nd.

You remember, Rachel, late last year, President Bush hosted a meeting in Washington where you had some pressure from Europe, Angela Merkel, Nicolas Sarkozy of France, both saying we need some sort of global regulatory structure.  Barack Obama indicated that he may be somewhat more receptive to that idea than President Bush was.

MADDOW:  John Harwood of CNBC and the “New York Times”—it‘s really nice to have you on the show tonight.  Congratulations again, John.

HARWOOD:  Thanks, Rachel.

MADDOW:  Washington has gone from “Roland Burris is unacceptable” to “Roland Burris is—whatever, go ahead and seat the guy” in just about a week.  Ahead, we will talk with the man who Illinois Governor Rod Blagojevich reportedly offered the job to before he offered it to Burris.  That would be Congressman Danny Davis.

And, breaking news from the Middle East tonight: Israel and Hamas may be sitting down very soon to talk about stopping the fighting.  We‘re getting the latest from NBC‘s Richard Engel on the ground—next.

But first, one more thing, about today‘s historic meeting of all the living presidents.  Bill Clinton and George H.W. Bush, as you know, have become quite friendly over the years after leaving the White House.  But you still have to wonder what Bill Clinton and the current President Bush would talk about if it was just the two of them hanging out.

Well, as an homage to the “Daily Show,” on which I am very excited to be appearing tonight, we at THE RACHEL MADDOW SHOW now bring you a moment of Bush/Clinton Zen from the Oval Office today.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER U.S. PRESIDENT:  I love this rug.

PRES. GEORGE W. BUSH, UNITED STATES:  Yes.

(END VIDEO CLIP)

MADDOW:  Yes, a great rug.  Love that rug.  Yellow rug.

For the rest of tonight‘s show, I promise 98 percent fewer (INAUDIBLE) non sequiturs.

(COMMERCIAL BREAK)

MADDOW:  If you saw our first annual award show on New Year‘s Eve, you may remember that we give an award in a category called “most memorable previously unknown performer in a supporting role.”  The ultimate winner was the lady with the crazy hair who told John McCain that Barack Obama was an Arab.  But that lady faced stiff competition from the likes of Joe the Plumber, the Iraqi shoe-thrower guy, and extreme Hillary Clinton supporter, Harriet Christian.

Why was Harriet Christian nominated?  Well, who could forget this?

(BEGIN VIDEO CLIP)

HARRIET CHRISTIAN, HILLARY CLINTON SUPPORTER:  The Democrats are throwing the election away.  For what?  An inadequate black male?

(END VIDEO CLIP)

MADDOW:  Even though Harriet Christian lost our New Year‘s Eve award to the lady with the crazy hair who called Obama an Arab, Harriet Christian is keeping herself in the public eye and apparently bucking for an award in next year‘s show.  Ms. Christian has now asked to be considered to fill Hillary Clinton‘s Senate seat in New York, saying that she represents everyday New York Democrats better than Caroline Kennedy does.

Go ahead.  You tell her she doesn‘t.  Do you want to tell her?

(COMMERCIAL BREAK)

MADDOW:  For three hours today in Gaza, the shelling and bombing and ground invasion paused so that humanitarian supplies could convoy into the sealed off Gaza war zone.  Israel‘s military stopped its fighting in Gaza; Hamas stopped shooting rockets into Israel for three hours.  Then it all resumed.

On this, the 13th day of the war in Gaza, there are some reports of progress toward a peace agreement.  French President Nicolas Sarkozy said today that Israel and the Palestinian Authority have accepted terms of a truce proposed by France and Egypt yesterday.  It sounds promising, right?

But the details are important.  When Sarkozy says he has brought the Palestinian Authority onboard, it‘s kind of like saying you negotiated with the New York Jets about who the New York Giants would draft next year.  The Palestinian Authority is not the same as Hamas.  The P.A. is in control over in the West Bank; it‘s Hamas who‘s in control in Gaza and it‘s where the fighting—Gaza is where the fighting is and it‘s Hamas who has been shooting rockets into Israel.

Also, the idea that Israel is onboard with this truce proposal, when you got ride down to it, the signals are mixed at best.  News did break late today that Egypt is expecting representatives of Israel and Hamas to meet tomorrow for talks.  So, we will see and we will hope.

Secretary of State Condoleezza Rice continues to say there should be a ceasefire.  But the Bush administration has appeared content to let others lead the way here, even though an emerging concern is about what the implications are for us in this, for American interests at home and around the world.

In Iraq, for example, Shiite cleric Muqtada al-Sadr issued a statement today threatening to resume attacks on American targets in Iraq because of American support for Israel‘s actions in Gaza.  Al-Sadr‘s statement said, quote, “I ask the Iraqi resistance to engage in revenge operations against the United States, the biggest partner of the Zionist enemy.”  Al-Sadr also called on Iraqis to put Palestinian flags on the roofs of buildings and mosques and churches in, quote, “a show support for the mujahedeen in Gaza.

Joining us now from Israel, very near the boarder with Gaza, is Richard Engel, NBC News chief foreign correspondent.

Richard, thank you so much for joining us tonight.

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT:  It‘s always a pleasure, Rachel.  How are you?

MADDOW:  Very good, and thank you.  What can you tell us, Richard, about the pace of military operations now and the situation inside Gaza?

ENGEL:  Inside Gaza, right now, there was a lull today, but like clock work, as soon as that three-hour truce was over, Hamas once again started its rocket launches.  There were about 20 rockets that Hamas sent into Israel today, and then Israel also continued it military operations focusing mainly in the southern Gaza Strip, destroying nine homes that were built over tunnels.  These are smuggling tunnels that Hamas has used in the past to bring weapons into the Gaza Strip which it fires into Israel.

But a lot of the activity is the building momentum around the peace initiatives.  There are, however, several different peace initiatives, one that senior Israeli official told me, there are 10 different international peace proposals that are being forwarded.  Many people are just trying to get into the act, but the one that seems to be gaining the most momentum is this one proposed by Egypt and France.

MADDOW:  On that proposal from Egypt and France, we heard from an Egyptian official today that they expect Israel and Hamas to be talking tomorrow, on Thursday.  Have you heard anything about Israel‘s inclinations toward a ceasefire?  How favorably they are viewing that proposal?

ENGEL:  Israel has not accepted the proposal despite what Sarkozy said.  Hamas has not either.  So, we‘re not—this is not a done deal.  It is not turning point.  A lot of it revolves around the order.  The Egyptians say that there should be an immediate ceasefire and then negotiations to talk about exactly what mechanisms will be put in place to prevent Hamas from bringing rockets into the Gaza Strip.

Israel wants it the other way around.  Israel wants there to be a full agreement in place agreed upon before there is any ceasefire.  And that is a fundamental difference.

MADDOW:  Richard, one of the major factors that affects how the international community views what‘s going on in Gaza is how much access we have to information about what‘s happening in Gaza, how many images we get, how close reporters can get.  It‘s important to note that you are not inside Gaza, that you are on the Israel border close to Gaza.  Have you heard anything about whether or not Israel will lift the restrictions on allowing foreign journalists into Gaza?

ENGEL:  Every single day, reporters have been petitioning to the Israeli government to ask for access.  I have called every day and said, “When are we going to be allowed in?”  And one Israeli official had an interesting explanation of this.  He said that right now, Israel doesn‘t want foreign journalists or journalists in general inside the Gaza Strip reporting about the humanitarian situation in there, reporting about the military activities, partly for tactical reasons.  They don‘t want anyone giving away battle details—which is understandable—but mostly to try and manage the image.

And the Israelis have timed this out.  This official told me that he expects this operation, while negotiations are taking place, will last several more days and that after that, reporters would eventually be allowed in.  But at that stage, Israel is assuming the United States will mostly be focused on all of the coverage around the inauguration and that viewers simply won‘t care at that point.

MADDOW:  Wow.  That‘s the kind of strategic decision you don‘t think about when you think about military operations, but I guess that‘s almost as important as anything else.

Richard Engel, NBC News chief foreign correspondent, thank you so much for joining us tonight.  Get a good night sleep.  Stay safe.

ENGEL:  My pleasure, thanks.

MADDOW:  After standing out in the cold rain yesterday to announce he was being denied Obama‘s Senate seat, Roland Burris got a much more warmer welcome today from Senate Majority Leader Harry Reid and Senator Dick Durbin.  Has the storm passed?  More on which way the winds are blowing for the would-be junior senator from Illinois—ahead.

(COMMERCIAL BREAK)

MADDOW:  A little later in the show, the show‘s first ever Australian guest, joining us to provide the inside Aussie scoop on why the former prime minister of his country gets to stay at our president‘s guest house while the Obama family has to stay in a hotel.

First, though, it‘s time for a few underreported holy mackerel stories in today‘s news.  Senator Majority Leader Harry Reid made headlines today by meeting with probably going to be senator after all, Roland Burris of Illinois.  But in the middle of that Blagojevich, Reid also offered ethics enthusiast a glimpse into the funhouse mirror, down is up, “Alice in Wonderland,” “Detroit wins the Super Bowl” opposite world that is ethics in the United States Senate.

Senator Reid was asked by Politico.com about next month‘s scheduled sentencing for his old friend, former Alaska Senator Ted Stevens, who was convicted of seven felonies for failing to disclose $250,000 worth of gifts from an Alaska energy firm.  Stevens faces five years in the crowbar hotel for each of those seven felonies.

According to Politico.com, Senator Reid does not think Ted Stevens should go to jail at all, saying, quote, “I don‘t know what good that would do.  He was a real war hero, too, you know.  He‘s been punished enough.”

Reid explained that members of Congress used to not disclose gifts.  And he said of the 85-year-old Stevens, quote, “It‘s a different world we live in, and Stevens did not understand that.”  Actually, awkwardly, Ted Stevens may be 85 years old, but there is direct evidence of him on tape saying that he knew that what he was doing could put him in jail.

Two years ago, the FBI was listening in and recording a phone call when Senator Stevens told the head of the oil company that‘s implicated in his downfall, quote, “They‘re not going to shoot us.  It‘s not Iraq.  The worst that can happen to us, we might have to pay a fine and serve a little jail time,” end quote.

Ted Stevens may be a really old guy, he may have been in the Senate a long time, he may have served honorably in World War II, but, you know, the man was also convicted of seven felony counts of corruption while serving as a United States senator.  The FBI taped him saying he knew that what he was doing could put him in jail.  Only in the United States Senate could that record earn you a 56-second standing ovation from your colleagues and the leader of that august body telling reporters you shouldn‘t go to jail.

You know, technically, these guys work for us.  We pay their salaries.  Maybe we could pay extra for them to form a committee or a search party or something to try to find the dignity that is supposed to attend their office.

And to complete our ethics daily double today, a little follow-up on our recent story about outgoing interior secretary, Dirk Kempthorne.  Dick Kempthorne made the show this week for spending $236,000 in taxpayer money to renovate his office bathroom -- $236,000, office bathroom.

Since we reported on the $236,000 office bathroom renovation, there have been two developments in the ongoing R-rated saga of ethics at the Department of Interior.  First, the interior secretary, the guy with the incredibly expensive office bathroom, gave a speech in Idaho, his last speech as head of the department, about how well he has done on ethics issues.  Mr. Kempthorne described hiring a new ethics officer, making people write things down in an ethics logbook, and crucially making an ethics DVD required viewing for new employees.

Yes, this is the same interior department where the inspector general found that its staffers have sex with and did lots of drugs with employees of oil companies that the department was supposed to be regulating among other lapses.

But—you hear that—it is required to watch that ethics DVD—required -- very tough.

The other Interior Department developments since our last report; we called the Department of the Interior today to see if they had any comment on the $236,000 office bathroom renovation for interior secretary Dirk Kempthorne.  The Department of the Interior did not contest the “Washington Post‘s” reporting of the overall cost of the bathroom, the wainscot wood paneling, the refrigerator, the freezer—in a bathroom—the shower.  But they did want us to let you know that the new towels in this bathroom absolutely, positively are not monogrammed.  So there‘s that.  The towels in the $236,000 remodeled executive bathroom are unmonogrammed.

Sleep easy, taxpayer.

(COMMERCIAL BREAK)

MADDOW:  So we have now officially reached the point in the show where we like to sit back, relax and reflect on the day and Roland Burris.  The former Illinois attorney general now appears to be on the verge of defying the odds and actually becoming the next junior senator from the great state of Blagojevich.

Today on Roland Burris, the would-be senator met behind closed doors with Democratic Senate Majority Leader, Harry Reid and emerged one step closer to calling Reid his distinguished colleague from Nevada.  Before flying back to Chicago and a date with his appointer‘s impeachment panel tomorrow, Mr. Burris held his now customary somewhat surreal, enthusiastic and impromptu somewhat lovable press conference.

Please enjoy.

(BEGIN VIDEO CLIP)

ROLAND BURRIS, (D) APPOINTEE JUNIOR SENATOR, ILLINOIS:  Right here.  Yes, please.  Oh, there is a gentleman, excuse me.  I just saw him.  This gentleman is from Somerset—Dick Barber (ph) stand up—he‘s from Somerset, New Jersey.  How many people did you e-mail across the country saying Burris should be the senator?

DICK BARBER:  About 100, and I sent it to the press included Chicago, New York, L.A.  I‘ve known Roland for 30 years.

BURRIS:  Thank you, dick.  I‘m sorry, go ahead.

(END VIDEO CLIP)

MADDOW:  He found a friend.  This is one of those tricks you‘ve seen before but it works every time.

By now, you‘re probably wondering why I‘m wearing this ridiculous hat.  Maybe you‘re not, but in case, the reason is that in order to explore exactly how we got from Roland Burris for senate, no way, no how to, I Roland Burris do solemnly swear, one must become an expert spelunker.  Hence the miner‘s hat.

Why do we need to spelunk here?  Because almost everyone involved in this process has now officially caved.  Whether they had good reasons or not for their initial position that no way, no how will Blagojevich ever get to pick the next senator from Illinois.  No matter the merits of why they hold that initial position, no one holds that position any longer.

Before caving, for example, the Illinois state legislature was threatening to strip Governor Blagojevich his power to even appoint a new senator.  They were going to hold a special election instead.  Remember that?  After caving on that, Blagojevich picked Burris.

Another example.  Before caving, the position of Illinois secretary of state Jesse White was that Governor Blagojevich‘s pick was tainted and out of principle he would refuse to accept the governor‘s filing or sign Burris‘s certification of appointment.  After caving secretary of state White says he hopes that Burris does become the next senator from Illinois, he should be seated and White says his own signature on the paperwork is purely ceremonial anyway.

Out with another example; how about president-elect Obama?  Before caving he released a statement saying that while he respects Burris, “senate Democrats made it clear weeks ago that they cannot accept an appointment made by Governor Blagojevich.  I agree with their decision.  The people of Illinois are entitled to a functioning government and major decisions free of taint and controversy.”  That was before caving.

After caving—

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES:  I think he is a fine public servant.  If he gets seated then I‘m going to work with Roland Burris just like I work with all the other senators.

(END VIDEO CLIP)

MADDOW:  Now you see why I need the cave explorer hat.  But perhaps deepest in the cave is Senate Majority Leader Harry Reid.  Before caving, Reid very publicly dug in his heels saying of Burris, quote, “We respect his years of public service but under these circumstances anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois and as we have said, will not be seated.”  A firm “Not on my watch” from Senator Reid.  That was before caving.

After caving—

SEN. HARRY REID, (D) SENATE MAJORITY LEADER:  I think it is a pretty easy hurdle to get over.  This senator from Illinois has to satisfy not only us but the people from Illinois that this is a fair deal and that‘s what we are working on right now.

MADDOW:  So essentially, all that is left is the oath.  In a matter of 24 hours Roland Burris went from being barred from the senate floor, kicked out in the rain, to a somewhat warm embrace and photo-op with the same Harry Reid who a week earlier said he had no shot of being seated.  How did we get here?  Blagojevich is winning here, isn‘t he?

I will take off my hat to welcome now Illinois Congressman Danny Davis who was offered the senate spot by Governor Blagojevich before Roland Burris.  Congressman Davis thank you so much for joining us tonight.

REP. DANNY DAVIS, (D) ILLINOIS:  Well, thank you very much.  It is a pleasure.

MADDOW:  Congressman, am I right that you turned down Governor Blagojevich when he offered you this senate nomination last month?

DAVIS:  That is correct.  An emissary of the governor‘s did, in fact, come to my office.  We had a conversation.  He indicated that the governor wanted to appoint me to the position.  I said give me a day to think about it.  And after thinking about it for a day I said thanks, but I‘d have to decline at the moment because of all the circumstances surrounding the situation.

MADDOW:  Did you think at the time that there was no chance that you would actually be seated as senator even if you had said yes to the senator?

DAVIS:  No.  I did not think that there was no chance.  However, I did think that it may have taken longer than what it appears to be taking now.  In addition to that, I also thought of what would happen in the next two years as I would decide to run for election, whether or not the environment would be conducive to my being elected.

MADDOW:  Are you surprised at the way that this has unfolded over the past couple of weeks?  It now does look like Roland Burris will probably be seated.  I have to ask you if you regret not accepting the offer yourself?

DAVIS:  Oh, no.  I do not regret that at all.  Because I felt that I had so many other things I was really working on that I was concerned about that I didn‘t want to have to spend so much time responding to reporters‘ inquiries about why I took the position, what kind of deal that the governor and I reached and all of those kind of things.

So I decided it was not in my best interest at the moment nor in my political interest at the moment to take the position as much as I would have liked to.

MADDOW:  Do you think that there are now ethical problems surrounding the decision to seat Roland Burris?  There is certainly a legal discussion to be had.  There is also an ethical and patriotic discussion to be had as well.

DAVIS:  Well, I think there are discussions to be had about the governor and those are going to continue.  As I‘ve said from the very beginning Roland Burris has an impeccable public career; 20 years as a statewide elected official.  Never any hint of impropriety, scandal or anything close to it.  There is no reason at all for Roland Burris not to be confirmed.

MADDOW:  When you look, though, at the difference between the way you approached the offer from Governor Blagojevich and the way Roland Burris approached it, are you proud of his decision?  Do you think that he made the right choice?  Do you think that even though there has been no taint on him throughout his long public career of service, do you think that this reflects poorly on him at all that he is going ahead and that he will—looks like—be appointed by Blagojevich under these circumstances?

DAVIS:  I really do not think it does.  The difference between Roland‘s position and my position was that the circumstances of our being were different.  Roland is retired.  I guess he is practicing law, doing some other things.  But he did not hold a public position and so it wouldn‘t interfere with that part of his life where in my case it would have.  And I would have been deterred from some other things.

I think it speaks well for Roland, quite frankly, in terms of wanting to assure that the best representative was put forth to handle the situation at the moment who also happens to be, is, in fact, an African-American, which will assure that there‘s African-American representation in the senate. 

MADDOW:  One last question for you, Congressman Davis, you have been in Illinois politics a long time and you know all the players involved here very well.  Those of us outside of Illinois looking in on this situation are starting to conclude that Governor Blagojevich‘s political acumen, his just plain skill as a politician is something that should not be trifled with.  Do you see this, the way this has unfolded as just a real statement of his political skills?

DAVIS:  Well, I think it is a statement of his political skill.  But also he has always contended that he was innocent and many other people have taken the position that you are innocent until proven guilty.  And up to this point he has not been indicted nor has he been proven guilty of anything.

MADDOW:  Illinois Democratic Congressman Danny Davis, sir we are very grateful for your time tonight.  Thanks for joining us.

DAVIS:  Thank you.

MADDOW:  The current president has effectively swiped the welcome mat from the front door of the presidential guest house forcing the president-elect and his family to stay at a hotel before the inauguration.  Our president apparently extending a big-hearted American welcome to the deeply unpopular former prime minister of Australia at the expense of our next American president.  Charmed, I‘m sure.

More on that in just a moment.

(COMMERCIAL BREAK)

MADDOW:  Tonight‘s lame duck watch is coming up but I could not resist mentioning this major new quack from the president.  With less than two weeks left of his time in office, President Bush yesterday appointed 45 people to long term Washington jobs, ensuring that the influence of George W. Bush will extend well into President Obama‘s first term and maybe even beyond.

The appointments include five-year terms on the Holocaust Memorial Counsel for Attorney General Michael Mukasey, Homeland Security Secretary Michael Chertoff and White House chief of staff Josh Bolton.  White House Counsel Fred Fielding was a winner, too.  He snagged a six-year term as a member of the International Center for Settlement of Investment Disputes.  Because this White House was good at that?

Bush also gave gigs to the lawyer who represented Dick Cheney in the Valerie Plame Wilson case and to Michelle Kwan, the figure skater, it was very strategically important to sneak in the Michelle Kwan appointment before Obama took over.

(COMMERCIAL BREAK)

MADDOW:  I will admit to feeling guilty right now as an American.  Guilty that the president, his salary I help play, is being ungracious, so ungracious as to force the president-elect whose salary I will also help pay to live temporarily in a D.C. Hotel room with his family instead of in the official presidential guest residence at Blair House.  I have therefore decided to assuage my guilt by taking it upon myself to peruse the specialty cocktail menu from the bar at the hotel where the Obamas are staying; it‘s a hotel called the Hay-Adams.

Mr. President-elect I hear you like martinis.  As penance for our national gaffe about you having to stay at a hotel, allow me to recommend that you try the Hay-Adams presidential martini special.  Only ask them to substitute gin for vodka and make some give you an olive that is not stuffed with cheese.  Plain olive, cheese should never be in a drink ever.  Okay?  I hope that is helpful.

In the meantime, with 12 days left of the Bush presidency please enjoy the Rachel Maddow Lame Duck Watch because somebody‘s got to do it.

After days of rigorous research and reporting by this show and by you, our beloved audience, we now know that the Obamas must wait another week to check into Blair House so that none other than John Howard, the widely not cared for former Australian prime minister can spend the night at Blair House with his wife on January 12th.

The following day, Howard will get what he is coming to Washington for, the presidential medal of freedom.  That‘s right.  John Howard will receive our nation‘s highest honor awarded to civilians.  And why not?  Howard supported the war in Iraq.  He said that terrorists were hoping Obama would win the election and he opposed the Kyoto protocol on climate change.  That‘s Bush era medal of freedom material, right?

We called John Howard‘s office in Sydney today and talked with his spokesman and he said, “Mr. Howard is staying at the Blair House one night per the invitation.  There is no entourage, which has been reported.  It will be just him and his wife.  It is highly unlikely he knew the situation when he accepted.”

Let‘s say he didn‘t and let‘s say John Howard can‘t stay at a hotel.  Maybe he doesn‘t have a credit card to put down for incidental expenses.  Does he and his wife really need all 70,000 square feet of space, all four of the interconnected town houses with 110 rooms and the 35 bathrooms that are Blair House?  Couldn‘t the Howards just use 33 of bathrooms so the Obamas could all brush their teeth in the morning?

Joining us now is the first-ever guest from Australia on the “Rachel Maddow Show,” Geoff Elliott the Washington correspondent for the Australian newspaper.  Mr. Elliott, thank you for coming on the show tonight.

GEOFF ELLIOTT, AUSTRALIAN CORRESPONDENT:  Thanks Rachel and thanks for having me.  2009 really is a year of firsts.  I‘m honored to be your first Australian guest.

MADDOW:  We‘re honored to have you.

What is the reaction in Australia about John Howard being the reason why the Obamas have to stay in a hotel?

ELLIOTT:  I think people are kind of a bit bemused by it all.  I think the reaction probably fits in with the sort of popularity rating for Obama in Australia which kind of tunes in with what you‘ve seen around the world, about 65 percent of Australians really wanted Obama to win this election.  Then I think you‘d probably guess about 65 percent of Australians are slightly bemused, if not guffawing at this sort of little bilateral spat that‘s going down.

MADDOW:  Comparing popularity, would you say that John Howard is beloved in Australia?  People are psyched?  They think he‘s worthy of getting the million of medal of freedom? 

ELLIOTT:  One doesn‘t want to disparage your freedom medals here.  It‘s a fine institution, kick-started by JFK.  But I think the general feeling is really like can‘t we just sort of move on.  This kind of reminds people of what—the change that people wanted for the last eight years, I guess.

You know, Howard was obviously very close with George W. Bush for the last eight years.  That‘s one of the reasons why, I think, perhaps he‘s getting this medal.  The two men are very close.

But I think coming just a week before this brand-new start for America and the world, people are kind of just wanting to focus on that, I think.

MADDOW:  Did John Howard‘s relationship with George Bush hurt him electorally in Australia?

ELLIOTT:  I think there was a bit of that and the economy at home.  But certainly the Iraq war was very unpopular in Australia as well.  And in fact he got thumped in the election in 2007.  He in fact lost his own parliamentary seat.  Our system works differently from you guys but he actually lost his seat as well; the second time only that‘s ever happened in Australian history.

I might add, Rachel, he lost it to a very intelligent TV person and she‘s gone on to do great things.  Food for thought.

MADDOW:  I refuse to think about that.  But thank you for suggesting it.

Last question, do you think that John Howard knew that he was ousting Obama from the Blair House?  We could get conspiratorial about him and bush getting in one last laugh here?

ELLIOTT:  It sort of looks like that.  I doubt it.  I think the president obviously offered it to Howard some time back and he accepted.  And in fairness, I guess the Obamas were hoping to move in a little earlier.  But I do think that the Howards are grandparents.  I think there was a great missed opportunity here in bilateral relations.  They could have been helping out buy a house and making sandwiches and helping pack off Sasha and Malia to school.  It could have been a great opportunity.

MADDOW:  Geoff Elliott, Washington correspondent for the Australian newspaper.  We‘re going to scour the Australian papers all the time to have excuses to bring you back on.  Thanks for joining us tonight.

ELLIOTT:  Thank you.  Thanks very much.

MADDOW:  Coming up on “Countdown,” definitive proof the economy is in serious trouble.

The latest business looking for a government bailout is the porn industry. 

Mike will join Keith.

And next on this show, I get just enough pop culture from my friend Kent Jones.  The Bush family is packing up their belongings.  No, there‘s not a place to sign up to help them.  We checked.

(COMMERCIAL BREAK)

MADDOW:  Now it‘s time for “Just Enough” with my friend Kent Jones.  Hi, Kent, what have you got? 

KENT JONES, POP CULTURIST:  Evening, Rachel.

How is this for a priority check?  Representative Cliff Stearns, a Republican from Ocalo, Florida wrote a letter to Speaker Nancy Pelosi urging her to rearrange the vote in the House of Representatives this week.  What was so urgent?  Why?  So he could go to the Florida-Oklahoma national championship football game tomorrow night, of course.  Quote, “We ask you move these votes to either Wednesday and/or Thursday morning to allow members to attend this historic game.”

Pelosi said, pfft—no.  What does it say when one of our elected leaders asks his boss to reschedule the nation‘s business so he and his buddies can go to a football game?  It says, we‘re going to be just fine.  Go, gators.  Come on.

Next—here are some words many Americans have longed to hear.  Bush is packing.  Literally, George and Laura are boxing stuff up right now preparing to leave the White House.  Here‘s Dana Perino.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY:  He and Mrs. Bush have been working to box things up.  They didn‘t come with a lot of things.  They didn‘t bring a lot of furniture here.  So mostly what they have are books.  Obviously their clothes and then some of the things that they‘ve picked up along the way on their travels.

(END VIDEO CLIP)

JONES:  Things they picked up along the way.  How do you box up hostility? 

How do you stuff packing peanuts around contempt?  Tell me that.

Finally, were you called names on the playground back in school?

Four eyes, bubble butt, pizza face, you know all of them.  One psychologist says that rather than scarring them for life, such smack talk can actually be good for kids, says Dr. Erin Heerey of the University of Bangor, in north Wales.  Quote, “Teasing helps children to discover how to use their bodies, voices and faces to communicate nuances of meaning.”  Oh, yes, I could detect those nuances as I was being shoved in the locker and being called a red-headed baboon, helped me grow, Rachel.  So it did.

MADDOW:  I‘m sorry, Kent.  I‘m sorry now for the people who did that.

But you work on a show now where people do dumb stuff like this to get attention.

JONES:  Oh, that‘s fantastic.  I want to wear the hat.

MADDOW:  And thank you for watching tonight.

Do you want to wear the hat? 

JONES:  Yes, I do.

MADDOW:  Here you go.

We will see you here tomorrow night.  Until then, you can see Kent in a hat, you can also hear me at 6:00 p.m. Eastern, coast to coast on Air America radio.

“Countdown” with Keith Olbermann starts right now.  Good night.

                                                                                               

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